The Exchanges

Q the show, as you know, and they said one of the things that you and Palantir have done so well is really just nailing the land and expand model with government contracts. What do you think has enabled you to do that so successfully? And then do you get real margin optimization? Because once you're in, it's just freaking hard to get any, you're retained. It's such a sticky customer.

A There's two pieces to this. Um, the first is that the land and expand doesn't work the way it does for commercial SaaS companies. What you're not trying to do is it very much is about expanding the product surface area. So as opposed to the license surface area, or I'm trying to get more users. I'm trying to, so it's, it's, it's, it's not sales driven expansion. It's actually product driven expansion. And if you think about how do I connect up more of what this customer is doing? Like I I've landed with this capability. How do I expand to, to, to lateral capabilities that are valuable to them? Many of those capabilities, you're not gonna, you're not gonna think those things up in Palo Alto eating strawberries. Like, you need to be in Djibouti, or in Kandahar, or in Balad, or, you know, in, in, in, uh, Ramstein, sitting with the users to understand what's next, because that truth exists, the truth is out there. You know, it, it, it's not in some document somewhere. It's not in, DC, the, the deep understanding of what's missing that you can build true stickiness around. That's, that's one dimension. Other dimension of this, like the reason you have to be there is how are you to your, to your margin optimization. It doesn't actually come from lock-in or kind of just like rent collection. It, it actually comes from understanding how do I continuously productize and create the effic…

AI assessment note: “margin optimization... actually comes from understanding how do I continuously productize”

Q Can I ask, if we go back to the days of Lockheed Martin, the founders innovating there, was there a political structure that was flexible enough then to make the changes that we need to happen now?

A I think there was almost a lack of political structures. You know, there was a willingness to, to move fast and break things. Kelly Johnson, and when I say founder, I really mean it in the broadest sense of the word. It's almost like renegade, maverick, innovator, Uh, Kelly Johnson is, is one of my favorite examples. This is the guy who founded Skunk Works at Lockheed Martin. This guy as a kind of, we would recognize him as a, as a hundred X engineer in the Valley today, right? He's 23 years old, joins the, joins Lockheed Martin, looks at a two D diagram of, of schematics of a plane and says, this plane is fatally flawed. He goes to the senior engineer at Lockheed and almost, almost to get rid of Kelly, he's like, yo, why don't you fix it? Of course he fixed it. So, This guy built 26 airframes in his career. Today, if you're an aerospace engineer, you're lucky to work on a third of a plane over your entire career, so you're never even gonna ship a plane. And this guy shipped 26, and some of his planes, like the U-II, we still fly. He built the first U-II in nine months. We can do this again, right? There's a, there's a way in which we build up so much process, so much risk aversion, uh, in order to constrain, I think that the greatest travesty of all of this is, it's like, in order to constrain the variance in outcomes, we have constrained ourselves to mediocrity. You know, it'…

AI assessment note: “I think there was almost a lack of political structures.”

Q Can I ask you, how do leadership changes impact buying processes? I know that's a weird one, but as you look towards elections, both in the UK, the US, like, do discussions just kind of break down because everyone's wondering which government will be in power? How does it change processes?

A I think much less than people think. There's obviously some effect, uh, and I think it varies by country in the, in the, in the UK system, given how involved the cabinet is with the proven contracts and the oversight and integration with Treasury. It's actually more relevant in terms of what agenda people will be following. Uh, in the U S I think the bigger issue is really Congress and whether there's a budget or not, you know, we, we don't have a budget. We'll enter a continuing resolution in a continuing resolution. That means you can't have any new starts. So all the things the department wants to do, they're gated and waiting until there is a new budget. And you know, this is a, this is a consequence of our, our system. I think it's a little facile to say like Congress should just pass the budget on time. And yeah, like that would be, that would be a nice world. But this is how we exercise political power and arrive at consensus. And I think there are, um, there are things that we can do to make this better, but I think that's kind of the bigger issue in the US.

AI assessment note: “I think much less than people think. There's obviously some effect”

Q Can I ask a really strange one, but a direct one? If you were to be in charge of the DoD today, what would you do from the procurement process, from the budgets, from deployment? What would you do if you were in charge?

A If I had one magic wand, one wish, it would be to return to a structure that we actually used to use, which is to have multiple competing programs to go after the same capability. So when we were building submarine launch ballistic missiles, we didn't have one program to build it. I think we had four, and this allowed, there's, there's a human factors element to this, and there's a, a practical technology element to this. Well, we weren't sure if they should be solid fueled, liquid fueled. There was all sorts of technical questions. And so you can either have the loudest voice win, or you could do a forever, never ending research project, or you can compete the ideas. And that means, you know, you're going much faster, you're learning, you're iterating. It's, it's an empirical discussion rather than a theoretical one. Um, you're buying down technology risk. Uh, but I think what's even more compelling than that is the human factor. I often think about what would motivate so many of these programs, like what would motivate the program manager to, to want to go faster, to want to insert new technologies more quickly. And the answer is nothing, because the distant threat of an enemy for a conflict that you might want to fight one day Does not warrant blowing up your schedule, introducing risk, um, you know, maybe having someone yell at you, because you're just judged by cost, sched…

AI assessment note: “return to a structure that we actually used to use, which is to have multiple competing programs”

Q Can I ask, if we go back to the days of Lockheed Martin, the founders innovating there, was there a political structure that was flexible enough then to make the changes that we need to happen now?

A I think there was almost a lack of political structures. You know, there was a willingness to, to move fast and break things. Kelly Johnson, and when I say founder, I really mean it in the broadest sense of the word. It's almost like renegade, maverick, innovator, Uh, Kelly Johnson is, is one of my favorite examples. This is the guy who founded Skunk Works at Lockheed Martin. This guy as a kind of, we would recognize him as a, as a hundred X engineer in the Valley today, right? He's 23 years old, joins the, joins Lockheed Martin, looks at a two D diagram of, of schematics of a plane and says, this plane is fatally flawed. He goes to the senior engineer at Lockheed and almost, almost to get rid of Kelly, he's like, yo, why don't you fix it? Of course he fixed it. So, This guy built 26 airframes in his career. Today, if you're an aerospace engineer, you're lucky to work on a third of a plane over your entire career, so you're never even gonna ship a plane. And this guy shipped 26, and some of his planes, like the U-II, we still fly. He built the first U-II in nine months. We can do this again, right? There's a, there's a way in which we build up so much process, so much risk aversion, uh, in order to constrain, I think that the greatest travesty of all of this is, it's like, in order to constrain the variance in outcomes, we have constrained ourselves to mediocrity. You know, it'…

AI assessment note: “I think there was almost a lack of political structures.”

Q Can I ask, how do you think about propensity to buy within governments? Again, you're like, what? This schedule's completely gone out the window. I'm loving this. But like, propensity to buy with governments, when you compare software versus hardware, are they the same? Are mindsets the same? Or do they differ in terms of their approaches?

A Yeah, the, the mindset is very, the whole government system is, is geared up to buy hardware, because they think of, they kind of, especially in the US government, but I think you can see it, it's analogous everywhere. Um, living in a world where government used to finance all R&D, it starts with R&D. Ok, I'm gonna pay you to do some R&D. Build a prototype. If I like this thing, I'm gonna procure it. I'm gonna buy it at scale. Once I've procured it, I have to sustain it. So they expect costs to go like this. Of course, that's not how software works at all, right? Software, first of all, software R&D costs only increase. You know, it's like no one, no investor thinks Microsoft's gonna spend less in the future on R&D than they spend in the present moment. That would be crazy. But the government somehow expects that to be true. Uh, and the second part is there is no difference, uh, in our modern technology world between procurement and sustainment. Like those concepts, even as I say the words, they may be like, what, what do you mean exactly here? You know, you're delivering software as a service. You're continuously innovating on it. It's never done. I think the government has absorbed that idea that software's never done, but they haven't absorbed the idea that that means there's at least a constant cost.

AI assessment note: “the mindset is very, the whole government system is, is geared up to buy hardware”

Q Can I ask a really strange one, but a direct one? If you were to be in charge of the DoD today, what would you do from the procurement process, from the budgets, from deployment? What would you do if you were in charge?

A If I had one magic wand, one wish, it would be to return to a structure that we actually used to use, which is to have multiple competing programs to go after the same capability. So when we were building submarine launch ballistic missiles, we didn't have one program to build it. I think we had four, and this allowed, there's, there's a human factors element to this, and there's a, a practical technology element to this. Well, we weren't sure if they should be solid fueled, liquid fueled. There was all sorts of technical questions. And so you can either have the loudest voice win, or you could do a forever, never ending research project, or you can compete the ideas. And that means, you know, you're going much faster, you're learning, you're iterating. It's, it's an empirical discussion rather than a theoretical one. Um, you're buying down technology risk. Uh, but I think what's even more compelling than that is the human factor. I often think about what would motivate so many of these programs, like what would motivate the program manager to, to want to go faster, to want to insert new technologies more quickly. And the answer is nothing, because the distant threat of an enemy for a conflict that you might want to fight one day Does not warrant blowing up your schedule, introducing risk, um, you know, maybe having someone yell at you, because you're just judged by cost, sched…

AI assessment note: “return to a structure that we actually used to use, which is to have multiple competing programs”

Q Yeah. Can I ask, when you look back on your lessons from them and seeing them, how do you think it impacted you?

A Uh, it really gave me this sense of looking forward. So like, look, all these bad things happen. What are you supposed to do about it? What the most productive thing you can do about it is stick together as a unit. And focus on what you could do next and, and support each other through that and support each other's ambitions. I think accomplishing great things in the world very rarely can be done alone. At least I've never experienced that. It's really the unit. There's all these unsung heroes. It's, it's better to think about it as a rock band, not a solo act. And getting that chemistry right is, I think, crucial. And it's as crucial at home as it is in, in business.

AI assessment note: “it really gave me this sense of looking forward”

Q Can I ask you, have you seen conversations change Since, uh, sadly Israel, but Russia. Like, has the discussion changed with buyers in terms of their tone, their requirement? Like, just, has the world changed significantly then, or has it continued in the same way?

A The buyers here are very serious people who wake up every day thinking, I might have to fight tonight, you know, or I, I'm in the position of providing capability to people who might have to fight tonight. So I don't feel a shift in tone. What I do feel is a shift in, um, the rate of learning. What is there to learn from? You look at the tactics, you look at what is working on the battlefield, and many of these things are surprising. They're different. They're innovating very quickly. They're changing the concepts of what you think you would even need to buy to have survivable capability, to win the next The next conflict. Uh, and that is evolving incredibly rapidly, and I think it continues to speak to this concept of, um, lower cost, attributable capabilities. You know, instead of buying something that you think, like an aircraft carrier or some space-based capability that's gonna be around for 30 or 50 years, and because it's gonna be around that long, it's gonna be so expensive, it's gotta just be perfect. It's like, I'm buying something I might use for the next year. Uh, you know, you look at Ukraine. Many of these drones are single-use drones, so there is no sustainment. You know, like, what, what are we talking about here? There is, like, your whole supply chain changes, like, the whole theory of how you're gonna employ the weapon is very, very different, and as a conseq…

AI assessment note: “I don't feel a shift in tone. What I do feel is a shift in”

Q I do want to move a little bit of a layer deeper just into the company level with Palantir. You said something that I thought was fascinating. You said content, not process is the eternal substance. I was like, Right. Good. That's helpful. Thank you. That's helpful, Sharm. What did you mean content not processes the eternal substance?

A Steve Jobs has this great loss interview about how companies get confused, uh, that when they're trying to replicate their success, they look at the process they went through, uh, to deliver their first success, and, uh, then they follow the process, and it doesn't work, because actually, you know, the first and most important thing is the content. It's the creativity, it's the substance, and that substance rarely And as he points out, people who are good at content tend to be a pain in the ass to manage. You know, they're a pain in the butt, I think was his, his quote. Um, but you put up with them because the content is just so good. And so I think there's this way in which process as a medicine is okay. You know, it's like, can you have zero process? No. But if you hold process up as the deity, if process ends up being what is actually an opioid, it's very bad. It's like, look, we just need to follow the process and we'll get to the outcome. That's almost never correct. It, the process is going to, you know, when the process becomes more important than the content, you're going to lose. And a lot of this comes up as like, well, I wish the interaction could be less frictionful. I wish there was more predictability. I wish there was all sorts of things which are just not true in the real world. Like, yes, we all wish the world could be different, but when you honor what the wor…

AI assessment note: “the first and most important thing is the content. It's the creativity”

Q Yeah. Can I ask, when you look back on your lessons from them and seeing them, how do you think it impacted you?

A Uh, it really gave me this sense of looking forward. So like, look, all these bad things happen. What are you supposed to do about it? What the most productive thing you can do about it is stick together as a unit. And focus on what you could do next and, and support each other through that and support each other's ambitions. I think accomplishing great things in the world very rarely can be done alone. At least I've never experienced that. It's really the unit. There's all these unsung heroes. It's, it's better to think about it as a rock band, not a solo act. And getting that chemistry right is, I think, crucial. And it's as crucial at home as it is in, in business.

AI assessment note: “it really gave me this sense of looking forward.”

Q you're the only buyer of said product, but I believe there's always a market, and so you could sell that aircraft to the US, but you could also sell it to the UK, or to France, or Germany, or any others. There's probably 10 buyers, in which case, if you want the concentrated supply, well then you can pay a premium. Then we have an efficient market. Am I wrong?

A I, I think you're right. I think people, I was trying to steel man it, which is like, okay, how did we end up here? Like, let's just assume, you know, it's Chesterton's fence. We didn't end up here because somehow the system is totally broken and incompetent. There was some thinking to it, but I think we're now in a world where the second order consequences of that system are dominating, and that's what's leading to a structural inability to innovate. Technology is supposed to make things cheaper. Somehow that doesn't happen in government. Why? You know, and to the extent things do get cheaper, they get cheaper because they're benefiting from the massive tailwinds from the commercial markets R&D that then subsequently makes its way to government.

AI assessment note: “I, I think you're right. I think people, I was trying to steel man it”

Q Do you worry that development is so far ahead of adoption? I think we all overly get excited, and actually, you know, 50% of European corporates don't know what slack is.

A I think the, the, the fear I really have here is how much are we modeling the appropriate use and how, how fixated are we on proof of value instead of proof of concept? We had a self-driving car demo in 2005. It drove 132 miles through the desert. That's really impressive. That's not a toy-like demo. You could argue only in 2023 did we have a proof of a self-driving car that could drive around the city reliably as a commercial Commercial offering. Nobody wants to be in that business. No, no enterprise wants to adopt this thing where the demos are amazing and 20 years from now, they might be able to put this in production. And I think as technologists, in order for us to not be in a bubble, we need to be really focused on proof, not proof of concepts and the speed by which we can affect these enterprises.

AI assessment note: “no enterprise wants to adopt this thing where the demos are amazing and 20 years”

Q mentioned Trey beforehand. When we look at like Andrew, you know, a lot of the success I always believed was the combination of Palmer and Trey, and actually Trey bringing a lot of the experience, probably from Palantir, um, of how government and selling to government works. If you were the V-one, how on earth did you make it work when no one had a clue how to do it?

A We're just committed to building the right product. And I don't want that to sound naive because actually I think it took us longer and was harder because we didn't know how to sell to government. You know, there was all these things that were kind of zero to one. There was no one else to really learn from. All the people who really knew it were not of the technology world and, and couldn't get it to work in our context anyways. So we had to kind of, um, flail our way through feeling it out from first principles and developing a new playbook that was going to work. And I think a playbook that subsequently has been really valuable to the rest of the

AI assessment note: “flail our way through feeling it out from first principles and developing a new playbook”

Q Can I ask, how do you think about propensity to buy within governments? Again, you're like, what? This schedule's completely gone out the window. I'm loving this. But like, propensity to buy with governments, when you compare software versus hardware, are they the same? Are mindsets the same? Or do they differ in terms of their approaches?

A Yeah, the, the mindset is very, the whole government system is, is geared up to buy hardware, because they think of, they kind of, especially in the US government, but I think you can see it, it's analogous everywhere. Um, living in a world where government used to finance all R&D, it starts with R&D. Ok, I'm gonna pay you to do some R&D. Build a prototype. If I like this thing, I'm gonna procure it. I'm gonna buy it at scale. Once I've procured it, I have to sustain it. So they expect costs to go like this. Of course, that's not how software works at all, right? Software, first of all, software R&D costs only increase. You know, it's like no one, no investor thinks Microsoft's gonna spend less in the future on R&D than they spend in the present moment. That would be crazy. But the government somehow expects that to be true. Uh, and the second part is there is no difference, uh, in our modern technology world between procurement and sustainment. Like those concepts, even as I say the words, they may be like, what, what do you mean exactly here? You know, you're delivering software as a service. You're continuously innovating on it. It's never done. I think the government has absorbed that idea that software's never done, but they haven't absorbed the idea that that means there's at least a constant cost.

AI assessment note: “the whole government system is, is geared up to buy hardware”

Q Can I ask you, have you seen conversations change Since, uh, sadly Israel, but Russia. Like, has the discussion changed with buyers in terms of their tone, their requirement? Like, just, has the world changed significantly then, or has it continued in the same way?

A The buyers here are very serious people who wake up every day thinking, I might have to fight tonight, you know, or I, I'm in the position of providing capability to people who might have to fight tonight. So I don't feel a shift in tone. What I do feel is a shift in, um, the rate of learning. What is there to learn from? You look at the tactics, you look at what is working on the battlefield, and many of these things are surprising. They're different. They're innovating very quickly. They're changing the concepts of what you think you would even need to buy to have survivable capability, to win the next The next conflict. Uh, and that is evolving incredibly rapidly, and I think it continues to speak to this concept of, um, lower cost, attributable capabilities. You know, instead of buying something that you think, like an aircraft carrier or some space-based capability that's gonna be around for 30 or 50 years, and because it's gonna be around that long, it's gonna be so expensive, it's gotta just be perfect. It's like, I'm buying something I might use for the next year. Uh, you know, you look at Ukraine. Many of these drones are single-use drones, so there is no sustainment. You know, like, what, what are we talking about here? There is, like, your whole supply chain changes, like, the whole theory of how you're gonna employ the weapon is very, very different, and as a conseq…

AI assessment note: “So I don't feel a shift in tone. What I do feel is a shift”

Q Can I ask you, how do leadership changes impact buying processes? I know that's a weird one, but as you look towards elections, both in the UK, the US, like, do discussions just kind of break down because everyone's wondering which government will be in power? How does it change processes?

A I think much less than people think. There's obviously some effect, uh, and I think it varies by country in the, in the, in the UK system, given how involved the cabinet is with the proven contracts and the oversight and integration with Treasury. It's actually more relevant in terms of what agenda people will be following. Uh, in the U S I think the bigger issue is really Congress and whether there's a budget or not, you know, we, we don't have a budget. We'll enter a continuing resolution in a continuing resolution. That means you can't have any new starts. So all the things the department wants to do, they're gated and waiting until there is a new budget. And you know, this is a, this is a consequence of our, our system. I think it's a little facile to say like Congress should just pass the budget on time. And yeah, like that would be, that would be a nice world. But this is how we exercise political power and arrive at consensus. And I think there are, um, there are things that we can do to make this better, but I think that's kind of the bigger issue in the US.

AI assessment note: “I think much less than people think. There's obviously some effect”

Q I do want to move a little bit of a layer deeper just into the company level with Palantir. You said something that I thought was fascinating. You said content, not process is the eternal substance. I was like, Right. Good. That's helpful. Thank you. That's helpful, Sharm. What did you mean content not processes the eternal substance?

A Steve Jobs has this great loss interview about how companies get confused, uh, that when they're trying to replicate their success, they look at the process they went through, uh, to deliver their first success, and, uh, then they follow the process, and it doesn't work, because actually, you know, the first and most important thing is the content. It's the creativity, it's the substance, and that substance rarely And as he points out, people who are good at content tend to be a pain in the ass to manage. You know, they're a pain in the butt, I think was his, his quote. Um, but you put up with them because the content is just so good. And so I think there's this way in which process as a medicine is okay. You know, it's like, can you have zero process? No. But if you hold process up as the deity, if process ends up being what is actually an opioid, it's very bad. It's like, look, we just need to follow the process and we'll get to the outcome. That's almost never correct. It, the process is going to, you know, when the process becomes more important than the content, you're going to lose. And a lot of this comes up as like, well, I wish the interaction could be less frictionful. I wish there was more predictability. I wish there was all sorts of things which are just not true in the real world. Like, yes, we all wish the world could be different, but when you honor what the wor…

AI assessment note: “the first and most important thing is the content. It's the creativity, it's the substance”

Q You mentioned mistakes over 18 years. I've made many mistakes, um, in hiring. When you reflect on yours, what have been some of your biggest hiring mistakes, and how did that change how you actually approach hiring?

A My biggest hiring mistakes were hiring for a factory. You know, I actually, as I, as I say, and I think it's like hiring what I thought I would need. Hiring what the world told me, you know, the way to solve this problem is to hire this profile. I didn't earn it from first principles. Like the, the most successful ones have always been when I took the talent and grew them into the roles that actually reflected their talent. And the worst mistakes where it's where I tried to import a solution to a problem because that's, that's the version, that's my version of the opioid. Wouldn't it be nice if I could just magically import this solution and it will solve all my problems in this area. I think I'm like a zero for 10 forever. You know, it's, yeah, it's never worked for me.

AI assessment note: “My biggest hiring mistakes were hiring for a factory.”

Q am because largely because of that, But you can't say, yeah, I, I worked my ass off, and I deserve to be here. I think that's a tough thing. Can I ask you, how did Palantir come to be? Because you were like Zoom in the early days. This was like Kevin Hart's, and I think, I think, 2002 1003 style. This was like dawn of, like, Silicon Valley greats.

A Yeah, so for, for the, for the audience, this is Zoom with an X, which was the, uh, the money transfer company that subsequently, uh, ended up with PayPal. Um, and that, I mean, that was great. Like, I really, Maybe backing up a little bit. I got to the valley because in this period of time, having graduated from Cornell, your, your opportunities as an engineer were really finance, consulting, or maybe a very large tech company where you were going to be a cog in the machine. Like Google didn't even come to the campus to recruit in those days. And so I just needed to get to Silicon Valley. I went to, to Stanford for that. Within two months of getting to Stanford, I had like begged And broken down Kevin Hartz's door to get a job at, at Zoom. And that, that's really how this kind of all started. So I joined Zoom as the fifth employee, and I spent three amazing and wonderful years there. But when I, uh, through Joe's freshman year roommate, actually, uh, I learned about Palantir. This, this very eclectic character, Gabe Rosen, who is a poet, who swims at the South End Rowing Club in freezing cold San Francisco Bay waters. I mean, this guy you can't really put in a box, but he's like, you know, you really, Need to meet Joe and hear about this company. And at the time it was 12 people, and they wanted to work on problems of national security. My uncle was a victim of the 2006 coordi…

AI assessment note: “through Joe's freshman year roommate, actually, uh, I learned about Palantir.”

Q mentioned Trey beforehand. When we look at like Andrew, you know, a lot of the success I always believed was the combination of Palmer and Trey, and actually Trey bringing a lot of the experience, probably from Palantir, um, of how government and selling to government works. If you were the V-one, how on earth did you make it work when no one had a clue how to do it?

A We're just committed to building the right product. And I don't want that to sound naive because actually I think it took us longer and was harder because we didn't know how to sell to government. You know, there was all these things that were kind of zero to one. There was no one else to really learn from. All the people who really knew it were not of the technology world and, and couldn't get it to work in our context anyways. So we had to kind of, um, flail our way through feeling it out from first principles and developing a new playbook that was going to work. And I think a playbook that subsequently has been really valuable to the rest of the

AI assessment note: “we had to kind of flail our way through feeling it out from first principles”

Q of making your bed at the The start of every day, and one of his is find someone to help you paddle, and it's very much along those lines. Can I ask, with that realization that bad things happen, and it's about putting your next step forward, do you believe in luck, and how do you think about the importance of luck versus pure hard work in factoring towards success?

A Um, I kind of have a mixed feeling on it. On one end, I think it's not very, I'm not sure why it's productive to believe in luck, especially if you think your luck can vary. Right? So, I mean, I think the most productive mind frame is something like, I have good luck, and the only thing I actually have control over is how hard I work. And so, let me focus on that part of it. Uh, and how smart I work, sure. But, but I have the, the other view of it is, is there, is there such a thing as luck? Probably. But it's, it's like quantum. You know, we, we often think, it's like, what matters more, luck or hard work, or It's like, why not both? And only one of these variables do you really have a lot of control over. So I, I think, you know, we, we probably have somehow in this current epoch, I think we've undervalued or under focused on hard work and overemphasize the role of luck in, in success.

AI assessment note: “we've undervalued or under focused on hard work and overemphasize the role of luck”

Q What state was Palantir in 2005? Just help, because we see it today as this incredible company serving many different governments around the world. Where was it in 2005? Like, where was the entry point for you?

A Uh, really, they had, they had focused on only hiring engineers, and I was, and I, of course, I'm an engineer by background, but I think they kind of figured out that they really wouldn't want my code in production. Uh, and, and so they were kind of at the point where it's like, okay, well, who's gonna actually interact with the customers to shape how we're building the product? And we don't want some sort of product manager who's thinking, like, this is a very deep and complicated problem. The intersection of the domain and the software will be nuanced. Um, you have a massive asymmetry of information that most of the software you're deploying is into a classified environment where at the time none of us had clearances. We, we were all wild outsiders with no knowledge of what was happening behind those, you know, these magical doors. Uh, but just a kind of almost maniacal commitment to trying to solve the problem nonetheless.

AI assessment note: “they had focused on only hiring engineers”

Q Can I ask, on decision makers, what does the decision making structure look like when selling to governments? Is it committees? Is it single points? Is it panels? How does that look?

A It is, it's closer to committees. I mean, it's, it's, it's, it's still a Byzantine process. I'm not sure I, even I, after 18 years of doing this, could really fully put it on a piece of paper and kind of tell you it out. You're kind of feeling your way through it. But, you know, people would say that you need a requirement, you need resource, i.e. money, and you need a contract. And I think at a highest level, you're trying to figure out how do you line up those three elements within the government customer you're working with to accomplish this. Now, The pathing of doing that, I think, is specific to every opportunity you're kind of going after.

AI assessment note: “It is, it's closer to committees. I mean, it's, it's, it's, it's still a Byzantine process.”

Q Can I ask, what happens if you continuously do duds? What if the masterpieces don't show?

A Yeah, I mean, I look, I think the artist might even blow up at that point. Artists want their art to be really good too. So, you know, if, if, if they're really going through a rough batch for a long time, that might be part of your, I think that's going to be a judgment call as the talent manager. No, no, I really believe. Like, I understand this is a long dry spell here, but I'm going to keep I'm going to keep you motivated. I'm going to keep you managing. I'm going to figure it out. Um, but of course, you know, you could just be wrong. Maybe, maybe the moment has passed. The art and the inspiration and the mutes doesn't exist.

AI assessment note: “that's going to be a judgment call as the talent manager.”

Q being yours? Cause you said a great statement when we chatted before, um, that you didn't expand on any of these. So thanks for the cliffhangers. They were great, like titles for a show, by the way, but I was like, okay, as I'm writing a follow-up question is interesting. America has a defense industrial problem. Why does America have a defense industrial problem? Can you help me understand this?

A Yeah. Well, at the risk of making a long story long, I think you could think about, like, when were we amazing at this? And I think it was really at the dawn of World War II. And there's this great book by Arthur Herman called The Arsenal of Democracy. It's probably the book I'm most obsessed with right now, and I've read it a couple times. It really talks about how The industrial mobilization worked. We brought Bill Knudsen, a Danish immigrant who was a very senior executive at Ford and General Motors into government. We made him from a civilian to an army three-star general. You know, he was commissioned as a three-star general, and he was in charge of the industrial mobilization. And we had this immense luxury during World War II, which was that we were at peace, Britain was at war, and we were supplying Britain. We had 18 months when we were not getting shot at to turn on our industrial production, to build factories and to retool them, and that took 18 months. We needed that time. The counterfactual would have been brutal. Uh, we also needed to leverage American industry. We were at that time, we had just figured out mass production, and we, America, had just figured out mass production. It was our unique strength in the world. So we applied that mass production technique not to Model Ts. We turned it to To bombers and fighters and tanks and all the machinery of war you ne…

AI assessment note: “innovation was not driven by faceless companies run by eighth generation leaders”

Q And so that inspired you that the only way to win was by working hard?

A That there was kind of this obligation to family, to society, that, that there's, there's just so much value in that. And I think in, in his life in many ways, I think you could say it would be, it would be kind of a trivial story if it was like, look, my dad was this guy who worked really hard. He took this risk and it all worked out. That's not what happened. It all didn't work out. You know, when my dad went to Nigeria, when I was a young kid, we, we suffered horrible armed violence. He was almost executed. He had to start over. We, we fled Nigeria. We, we resettled in the U.S. effectively. ...as refugees starting from scratch, And I was raised, and he lived his life with this deep understanding of the counterfactual. That, like, no matter how bad it is, remember what it could have been. You know, your alternative to this present moment is being dead in a ditch. And how grateful you should be for that, and how you should not squander the opportunity that you have as a consequence of that.

AI assessment note: “That's not what happened. It all didn't work out.”

Q you, it's so hard to hire because you need to be able to detect those magicians, but then you also need to hire for process around them as well, and there is room for structure in both, as you said. When you reflect on hiring, you said talent spotting eats strategy for breakfast. How do you think about talent spotting, and how has how you approach it changed over time?

A Yeah, I think this is so important. I think there's a way in which We've kind of constrained our cultures and our companies because we've leaned into The opioid of, of, of structure, essentially. Like, look, I'm gonna structure my company as a factory. You're gonna, here are all the roles and the levels I have, and here's the org chart, and it's all very clean and laid out, and if you play by these rules, you can figure out how to navigate. I think one of the challenges is that, like, really talented people are highly asymmetric. You're much better off designing a role around who they are, rather than saying, what role can I slot you into? It's almost like, definitionally, None of those roles are going to fit them. It's going to put them in a position of relative weakness. They're going to blow something up. They're going to feel like they have to be good at something they're never going to be good at. And so it's, it's a total evisceration of, of their potential. And if you said instead, look, instead of being a factory, we're going to be an artist colony. I don't get Dali to paint better by yelling at him to paint more like Monet. It's like each one of these individuals is an individual, and I'm gonna go on a journey to craft a role around who they are, and I'm gonna make it okay for them to, to, to like flex their role, to, to meet their capabilities. Uh, and even more impor…

AI assessment note: “really talented people are highly asymmetric. You're much better off designing a role around who they are”

Q mean by that is in, in peace times, you're absolutely right. People can wait. They can say, I want to pay by the hour, pay by the hour. When there is sadly conflicts around the world and you need to buy and you need to innovate and improve, you and private companies have leverage to say, align to our business model or don't buy. Does, does time not change that?

A I'm forgetting, um, Churchill's chief of the, uh, general staff. But he had, I think it was Fields maybe, but he, he had a observation, which is that when you go to war, the first thing you need to do is fire all your generals. Like generals that succeed in peacetime are, and this, this was a general himself, right? The generals that succeed in peacetime are, are not the right generals to succeed in war and vice versa. Uh, and really what I'm saying there is something a little smaller, which is that when, when there is war, you do have a different sort of mobilization. You have a different sort of leadership Um, people are willing to make different decisions. It's almost like the only thing that works when it really matters is breaking the process and doing what's right, and the process never really works. It's, it's, it's kind of a digression from the main, main point around this, but I think you don't have leverage in the sense that, look, you're gonna buy whatever model works. It's, it's the opposite, which is the leadership says, oh, I'm willing to break the model because I see what's right. I didn't, you know, it's not, you know, like there wasn't a problem big enough to solve before, so I wasn't gonna change how we did business. I have a problem to solve, and I, as a leader, I'm gonna say, yes, this is the right path.

AI assessment note: “I think you don't have leverage... leadership says, oh, I'm willing to break the model”

Q Can I ask, on decision makers, what does the decision making structure look like when selling to governments? Is it committees? Is it single points? Is it panels? How does that look?

A It is, it's closer to committees. I mean, it's, it's, it's, it's still a Byzantine process. I'm not sure I, even I, after 18 years of doing this, could really fully put it on a piece of paper and kind of tell you it out. You're kind of feeling your way through it. But, you know, people would say that you need a requirement, you need resource, i.e. money, and you need a contract. And I think at a highest level, you're trying to figure out how do you line up those three elements within the government customer you're working with to accomplish this. Now, The pathing of doing that, I think, is specific to every opportunity you're kind of going after.

AI assessment note: “It is, it's closer to committees. I mean, it's, it's, it's, it's still a Byzantine process.”